I) Ilr - Cut-363 (S.C.

2017 (I) ILR - CUT-363 (S.C.) SUPREME COURT OF INDIA ARUN MISHRA,J. & DR. D.Y.CHANDRACHUD, J. CIVIL APPEAL NO. 3049 OF 2017 (ARISING OUT OF SLP(C) NO. 32285 OF 2015) JAYAKANTHAM & ORS. ........Appellants .Vrs. ABAYKUMAR ........Respondent SPECIFIC RELIEF ACT, 1963 – S. 20 (1),(2) Decree of specific performance – When to be granted ? – Though it is the discretionary power of the Court, such discretion should not be arbitrary but the same must be sound and reasonable being guided by judicial principles, capable of correction by a Court of appeal – It is also not always necessary to grant specific performance merely because it is lawful to do so but the Court must consider, whether a party is trying to take undue advantage over the other and the hardship that may be caused to the defendant by directing specific performance. In this case the father of the respondent-plaintiff carried on money lending business and the defendants had a transaction of loan with the father of the respondent and inorder to return the loan of Rs. 1,00, 000/- agreement to sell was executed – So the terms of contract and the conduct of the parties at the time of entering into the agreement gave the plaintiff an unfair advantage over the defendant which makes it inequitable to enforce specific performance and in the above back ground a decree for payment of compensation in lieu of specific performance would meet the ends of justice – Held, the decree for specific performance is set aside and shall stand substituted with a direction to the appellants to pay rupees fifteen lakhs to the respondent in lieu of specific performance – Such amount shall be paid within two months from the date of receipt of a copy this judgment, failing which the amount shall carry interest at the rate of 9 % per annum. (Paras 10 to13) Case Laws Referred to :- 1 AIR 1987 SC 2328 : Parakunnan Veetill Joseph's Son Mathew v. Nedumbara kuruvila's Son and Ors 1 2. (1994) 4 SCC 18 : Sardar Singh v. Smt. Krishna Devi and another 2 : 3. (1999) 5 SCC 77 : K. Narendra v. Riviera Apartments (P) Ltd 3 4. (2001) 6 SCC 600 : A.C. Arulappan v. Smt. Ahalya Naik 4 5. (2002) 8 SCC 146 : Nirmala Anand Vs. Advent Corporation (P) Ltd. & Ors.5 364 INDIAN LAW REPORTS, CUTTACK SERIES [2017] For Petitioner(s) : Mr. K. V. Mohan For Respondent : Mr. A. Lakshminarayanan, AOR Date of judgment : 21.02.2017 JUDGMENT DR. D. Y. CHANDRACHUD, J. Leave granted 2. This appeal arises from a judgment rendered by a learned Single Judge of the Madras High Court on 11 June 2015 in a second appeal under Section 100 of the Code of Civil Procedure, 1908. Dismissing the second appeal, the learned Single Judge confirmed the judgment of the Principal District Judge, Villupuram by which an appeal against the judgment of the sub-Judge, Kallakurichi was dismissed. The trial court decreed the suit for specific performance instituted by the respondent against the appellants. 3. The subject matter of the suit for specific performance is a property bearing survey No. 314/1A at Kallakurichi village admeasuring 735 square feet upon which a residential house is situated. An agreement to sell was entered into between the appellants and the father of the respondent on 2 June 1999. The consideration agreed upon was rupees one lakh sixty thousand of which an amount of rupees sixty thousand was received as advance. The balance was to be paid when the sale deed was executed. Time for completion of the sale transaction was reserved until 2 June 2002. A legal notice seeking performance of the agreement was issued on 7 May 2002. In response, the defence that was set up was inter alia that the agreement to sell was executed only as a security for a loan transaction. 4. In support of the plea for specific performance, the father of the respondent was examined as PW1. Evidence on behalf of the appellants was adduced by DW1 and DW2. The trial court by a judgment and order dated 5 January 2007 decreed the suit for specific performance and directed the appellants to execute a sale agreement in favour of the respondent against receipt of the balance consideration of rupees one lakh. The trial court noted that the agreement to sell had been registered and rejected the defence that it is merely a document executed by way of security for a loan transaction. In the view of the trial court, there was nothing in the agreement to indicate that it was executed merely by way of a security. A finding of fact was arrived at to the effect that the respondent was ready and willing to perform the agreement. The suit was decreed. The judgment of the trial court was 365 JAYAKANTHAM -V- ABAYKUMAR [ DR. D. Y. CHANDRACHUD, J. ] confirmed in appeal on 26 August 2008 by the Principal District Judge, Villupuram. 5. A second appeal was initially admitted on a substantial question of law but was eventually dismissed by a learned Single Judge of the Madras High Court on 11 June 2015. 6. When the Special Leave Petition came up on 29 January 2016, this Court observed that there was no error in the finding of facts recorded by three courts concurrently and hence those findings could not be reversed on merits. However, the alternative submission which was urged on behalf of the appellants was that the suit property is the only property held by them and has an extremely high value. The appellants stated that they are ready to pay a sum f rupees ten lakhs or even more to retain it. Notice was issued to the respondent limited to the above contention. 7. On behalf of the appellants, it has been submitted that this is a fit and proper case where specific performance ought not to be ordered and a decree for compensation in lieu thereof would meet the ends of justice. It was urged that specific performance of an agreement need not necessarily be ordered merely because it is lawful to do so and the matter lies in the judicious exercise of discretion of the court. In support of this plea, reliance was placed on several circumstances; primary among them being the fact that it is not in dispute that the father of the respondent who entered into the transaction and deposed as PW1(the respondent being about sixteen years of age at the time of execution of the agreement) carried on money lending business. Opposing this submission, it was urged on behalf of the respondent that while it is true that his father is a money lender, this by itself would not disable the respondent from seeking specific performance. Moreover, it was urged that the mere fact that there has been an escalation of land prices would not be a justification to refuse specific performance. 8. While evaluating whether specific performance ought to have been decreed in the present case, it would be necessary to bear in mind the fundamental principles of law. The court is not bound to grant the relief of specific performance merely because it is lawful to do so. Section 20(1) of the Specific Relief Act, 1963 indicates that the jurisdiction to decree specific performance is discretionary. Yet, the discretion of the court is not arbitrary but is “sound and reasonable”, to be “guided by judicial principles”. The exercise of discretion is capable of being corrected by a court of appeal in the hierarchy of appellate courts. Sub-section 2 of Section 20 contains a stipulation of those cases where the court may exercise its discretion not to 366 INDIAN LAW REPORTS, CUTTACK SERIES [2017] grant specific performance. Sub-Section 2 of Section 20 is in the following terms : “Section 20 (2). The following are cases in which the court may properly exercise discretion not to decree specific performance- (a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or (b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; (c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.” However, explanation 1 stipulates that the mere inadequacy of sideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, will not constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Moreover, explanation 2 requires that the issue as to whether the performance of a contract involves hardship on the defendant has to be determined with reference to the circumstances existing at the time of the contract, except where the hardship has been caused from an act of the plaintiff subsequent to the contract. 9 . The precedent on the subject is elucidated below : (i) In Parakunnan Veetill Joseph's Son Mathew v. Nedumbara kuruvila's Son and Ors 1 ,this Court held that : “…14. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so.

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